Self-Employment as a Vocational Rehabilitation Employment 
    Outcome in Rural and Urban Areas

Nancy L. Arnold, Ph.D.Tom Seekins, Ph.D.Craig Ravesloot, 
Ph.D.Research and Training Center on Rural Rehabilitation 
ServicesRural Institute on DisabilitiesThe University of 
MontanaMissoula, Montana
A version of this article was published in the Rehabilitation 
Counseling Bulletin.
Estimates indicate that between 2.7 and 3.5 million people 
between the ages of 16 to 64 with a work disability live in rural 
areas of the United States (LaPlante, 1992; U.S. Bureau of the 
Census, 1992).  These people are more likely to be unemployed 
than their nondisabled counterparts (U.S. Bureau of the Census, 
1983).  Approximately 26.2% of the people with disabilities 
living in nonmetropolitan areas are employed versus 67.8% without 
disabilities (U.S. Bureau of the Census, 1983).  Further, they 
are less likely to have jobs than their peers in metropolitan 
areas (26.2% vs. 27.4%) (U.S. Bureau of the Census, 1983).    
Unemployment rates are a direct result of an area's economy and 
the nonmetropolitan economy has always grown more slowly than 
expected, in spite of favorable economic factors (Parker, 1991).  
This slow growth can be attributed, in part, to variations in the 
industrial composition, regional factors, the cost of labor, 
educational level, demographic composition, and macro-level 
economic characteristics.  Another contributor to the 
less-than-expected growth is the "rural factor."  The rural 
factor is a composite of low population densities, small size, 
distance from metro business and finance centers, and a distinct 
rural culture (Parker, 1991).  Since 1986 these factors combined 
have resulted in nonmetropolitan general population unemployment 
rates (this rate includes discouraged workers and half the 
workers employed part time for economic reasons) that are higher 
than metropolitan unemployment rates (Dagata, 1992/93).   
Besides fewer jobs, wages are lower in nonmetropolitan areas.  
According to the 1983 Census the average metropolitan wage for a 
person without a disability was $13,896.  In a nonmetropolitan 
area the average wage was $10,899.  For people with a work 
disability the average metropolitan wage was $11,044 and the 
average nonmetropolitan wage was about two-thirds that at $7,649 
(U.S. Bureau of the Census, 1983).
The slower economic growth, higherunemployment rate, and lower 
wages found in nonmetropolitan areas present challenges to 
vocational rehabilitation (VR) counselors trying to help people 
with disabilities find suitable jobs.  A slow growth economy 
results in fewer employers, fewer job opportunities, and higher 
unemployment.  This increases the competition for each job which 
reduces the odds of a person with a disability securing 
employment.  Further, if working results in a loss of disability 
benefits, a person with a disability is generally not likely to 
work because a paycheck and job benefits do not usually 
compensate for these lost benefits.  As a result of these 
challenges vocational rehabilitation counselors working in rural 
locations may find that self-employment, rather than no placement 
or placement in a marginal competitive employment situation, is a 
viable solution.  
Self-employment is an option used at a higher rate in rural areas 
(self-employment rates: 12.7% rural, 7.2% urban) (U.S. Bureau of 
the Census, 1983).  Although a number of state VR counselors who 
participated in the telephone-based survey discussed in this 
article view self-employment as too difficult for a person with a 
disability because of the person's  decreased physical capacity 
and the demands of running a business,  the U.S. Bureau of the 
Census (1983) data show a different picture.  According to these 
data, people who report a work disability are twice as likely to 
report being self-employed (14.7%) as people without a disability 
(8.0%) (Seekins, 1992).
Based on the above data, researchers at the Montana University 
Affiliated Rural Institute on Disabilities speculated that 
self-employment may be an important Vocational Rehabilitation 
option in rural areas.1  However, before recommending it be used 
more regularly in rural areas, a better understanding of its 
current use was needed.  To find out about its use, three studies 
were conducted.  The first study examined national employment 
outcomes.  The second surveyed rural and urban counselors.  The 
third examined the range of self-employment businesses pursued by 
vocational rehabilitation consumers.  Results of these studies 
are presented below.
Study 1: The use of self-employment in rural and urban states
Self-employment is a legitimate vocational rehabilitation 
employment outcome.  Given that in the general population 
self-employment is more prevalent in rural than in urban areas, 
it was hypothesized that vocational rehabilitation employment 
outcomes to self-employment would occur at a higher rate in rural 
states than in urban ones.
Method
To test this initial hypothesis that VR counselors in rural 
states were more likely to use self-employment as a VR employment 
outcome than wereVR counselors in urban states, first we examined 
the 1988 closure rates to self-employment for each state 
(Rehabilitation Services Administration, 1988).  To do this, a 
ruralness index (Jackson & Seekns, 1989) was calculated for each 
state by combining measures of population density and percentage 
of population living in urban areas.  Table 1 presents the 
percent of closures to self-employment reported by each state as 
well as the ruralness ranking of each state using this method. 
Next we calculated the Spearman Rho Rank-Order Correlation 
between each state's rural ranking and each state's ranking with 
regard to VR self-employment closures.
Results
There were 214,229 VR employment outcomes reported nationwide in 
1988.  Of these, 4,871 (2.27%) were to self-employment.  The 
percentage of closures to self-employment ranged from .53 to 
7.34% across all states.  Results of the rank order correlation 
indicated that self-employment outcomes were significantly more 
likely in rural than in urban states (r = .538; p < .000).
Discussion
Results suggest that the use of self-employment as a VR 
employment outcome is, indeed, more likely in rural states than 
in urban ones.  Overall, the use of self-employment seems 
surprisingly low, however,  given that the pattern of 
self-employment reported by people with a work disability is so 
much higher than that reported by the rest of the population.  
Clearly, VR services cannot account for this discrepancy.  
Rather, it is surprising that the rate of employment outcomes to 
self-employment do not more closely parallel the rate of 
self-employment in the general and rural population.
Study 2: Rural and Urban Counselor Attitudes About, and Use of, 
Self-Employment As an Employment Outcome
Our first study of the use of self-employment as a vocational 
rehabilitation employment outcome suggested that, while 
self-employment is used by VR at a lower rate than that found in 
the general population, it was more likely to be used in a rural 
than an urban state.  As most states have both rural and urban 
areas, however, this level of analysis may obscure important 
differences or present a pttern where none exists.  Using data 
available from RSA, it was not possible to explore 
self-employment in more detail.  Therefore, in order to examine 
the use of self-employment more accurately, we conducted a survey 
of rural and urban state Vocational Rehabilitation counselors 
across the nation.
Method
Research Participants
Participants were a total of 95 state vocational rehabilitation 
counselors from 10 states.  Five of the states had high 
self-employment rates (from 4.02% to 7.34%) and 5 had low 
self-employment rates (from 0.53% to 2.71%) during 1988.  
Participant selection was based on the number of self-employment 
outcomes during the period 10/1/89 through 9/30/90.  In 9 states, 
5 counselors with the most self-employment outcomes (ranging from 
1 to 29 ) and 5 counselors with the least (all had no 
self-employment outcomes) were selected to participate.  In one 
state only 5 counselors participated, 2 with high and 3 with low 
self-employment outcomes.  If a state had more than 5 counselors 
with high or low self-employment outcomes, participants were 
randomly selected from the two groups; otherwise all counselors 
within the group were selected.
Procedures
Data were collected using two survey instruments.  The primary 
consumers of this study were defined as rehabilitation 
administrators and counselors.  We took several steps to involve 
them in this project.  First, to begin to develop these survey 
instruments, state directors of Vocational Rehabilitation in 
eight states were asked to nominate one counselor, located in a 
rural area with a history of closures to self-employment, to be 
interviewed for our project.  A total of nine counselors were 
interviewed either in person or on the telephone.  The interview 
was guided by a series of predominately open-ended questions that 
were developed from discussions with the local Missoula, Montana 
Vocational Rehabilitation office staff. 
Two survey instruments resulted from these interviews; one 
mail-based and one telephone-based.  The mail-based instrument 
primarily addressed counselor attitudes and beliefs on the use of 
self-employment (Ravesloot & Seekins, in press).  All items on 
the survey used a 9-point Likert-type scale anchored at each end 
with positive or negative adjectives.  Questions asked by 
telephone were dichotomous (e.g., requiring yes or no answers, or 
estimates of frequency), open-ended, or used a rating scale.  
They addressed definitions, caseload, consumer interest in 
self-employment, agency policy and procedures, counselor 
procedures, consumer characteristics, and training available and 
needed.
Data Analysis
Rural/urban classification.  Counselors were asked to indicate 
the percentage of consumers they served in each of four 
demographic areas, including remote, rural, nonmetropolitan, and 
metropolitan.  Table 2 presents the four classifications and 
their definition, as presented on the questionnaire.
A counselor was considered rural if 50% or more of his or her 
cases for the year prior to the survey were from remote or rural 
areas and if 25% or less were from metropolitan areas.  
Conversely, a counselor was considered urban if 50% or more of 
his or her cases were from urban areas and 25% or less came from 
remote or rural areas.   Counselors who did not meet these 
criteria were excluded from data analysis. This reduced the 
sample from 78 to 60 participants (41 rural and 19 urban).
Statistical analysis.  Group differences were tested using 
t-tests for means and chi-square tests for frequencies. Alpha 
level was set at .05.
Results
Seventy-eight of the 95 counselors (82%) contacted returned 
completed mail surveys; 58 (61%) participated in the telephone 
survey.  All the people who participated in the telephone survey 
also returned their mail questionnaire.  Mail-based surveys were 
used to determine if a counselor served primarily a rural or an 
urban area.  Forty-one (52.6%) respondents were classified as 
serving rural areas and 19 (24.4%) as serving urban areas.  
Eighteen (23.1%) respondents fell between our rural/urban 
classification criteria so their responses were not used in the 
following analyses.
As Table 3 shows, at the time of this survey, both rural and 
urban counselors indicated they had been VR counselors for an 
average of 11 years.  Both also averaged about the same number of 
people on their active caseload.  Rural  counselors averaged 17.7 
self-employment outcomes during their entire career, ranging from 
a low of 0 to a high of 100.  Urban counselors averaged 5.9 
self-employment outcomes during their entire career with a range 
of 0 to 28. Although rural counselors reported averaging a higher 
number of self-employment outcomes per year (1.6) than urban 
counselors (.7), the difference was not statistically 
significant.
Table 4 presents a comparison of ratings assigned by counselors 
when asked to rate how they usually viewed self-employment.  To 
assign a rating, counselors used a scale that ranged from 1 to 9.  
The scale was anchored on each end with opposite adjective pairs.  
The positive qualities were at the 9 end of the scale.  Rural 
counselors rated 8 of the 11 items higher than urban counselors, 
with 4 of these differences reaching statistical significance 
(successful, promising, realistic, and familiarity).
Table 5 presents ratings by counselors of consumer 
characteristics relevant to self-employment.  In general, rural 
and urban counselors rated the characteristics similarly.  Rural 
and urban counselors differed significantly in their views on how 
important they thought it was for the consumer to have past 
experience in the type of business being considered, however.  
Although both rural and urban counselors considered past 
experience as important, rural counselors considered it less 
important.  Further, although all characteristics were considered 
important by both groups, rural counselors rated 7 of the 11 
characteristics as slightly less important.
The groups differed significantly on their use of a standardized 
assessment to determine the feasibility of a self-employment 
closure.  Sixty-three percent of the rural counselors and 100% of 
the urban counselors reported using no standardized assessment 
(chi-square = 5.1, p = .02).  Further, although both groups 
agreed that the decision to pursue self-employment was the 
consumer's, rural counselors were significantly less likely to 
agree with the statement (t = - 2.31, p =. 025).
No significant differences were found between rural and urban 
counselors in their reaction to a consumer's inquiry about 
self-employment; if the state's investment in self-employment 
should be "protected"; if they required that consumers develop a 
business plan; about their attitudes towards policies, office 
atmosphere, agency goals, consumer and reactions; in having a 
unique approach or method for self-employment; about their 
experiences; about their use of outside resources to evaluate a 
proposed business; and about relevant community attributes.  
Discussion
Results of this analysis are somewhat difficult to assess due to 
the small sample sizes.  Because of the small number of 
participants, the samples may not reflect accurately the 
populations they represent.  The small sample sizes also affect 
the power of the statistics, in this case t-tests and chi-square 
tests, to detect differences between the sample groups even if 
differences exist (Cohen, 1988).  Remembering this was an 
exploratory project and based on a limited budget, it was decided 
prior to conducting the research that the counselors selected to 
participate would provide the researchers with the most insight 
into both sides of the use of self-employment by VR counselors.  
Results of the surveys support the findings from Study 1 showing 
a greater use of self-employment as a vocational rehabilitation 
employment outcome by counselors serving rural areas.  Rural 
counselors report closing more cases to self-employment annually 
and throughout their careers than urban counselors.  In general, 
rural counselors also appear to view the self-employment option 
more favorably than their urban counterparts.
The counselors in this sample do not appear to differ 
significantly in their views of the characteristics consumers 
should have in order to be successful in self-employment, except 
that urban counselors thought that past experience with the type 
of business being considered was significantly more important 
than rural counselors.  Although both groups said a consumer 
should possess all the personal characteristics we asked about, 
they thought that enthusiasm, business planning ability, good 
organizational skills, and persistence were more important than 
other characteristics.
Urban counselors viewed the self-employment process they went 
through as less successful than rural counselors.  Although both 
groups rated the process as risky, the difference between rural 
and urban responses was significant.  Urban counselors viewed the 
process as unrealistic while rural counselors viewed the process 
as significantly more realistic.  Both groups viewed 
self-employment as difficult, however, urban counselors thought 
it significantly more difficult than rural counselors.      
Neither group thought that people with certain disabilities are 
more appropriate candidates for self-employment.  Both groups 
thought that self-employment should be as available to a consumer 
as any other rehabilitation option.
The counselors in the sample thought it quite important to use 
outside resources for evaluating the consumer's proposed 
business.  However, a larger percentage of urban counselors said 
they actually used external consulting services.  This may 
reflect both less access to such resources and less time to use 
them for rural counselors.  On the whole, counselors tend not to 
use a standardized assessment to determine the feasibility of a 
self-employment closure. In this sample, rural and urban 
counselors differed significantly in their use of standardized 
assessments, however.  No urban counselors  responding to this 
question used a standardized assessment.  As such, it appears 
that rural counselors may compensate for lack of access to 
consultants by using standardized assessments.
In summary, rural counselors may tend to use self-employment more 
often because they have a more positive view of it, because they 
are more willing to work with consumers to establish businesses 
in areas where the consumers have had no previous experience, and 
because they view the process as more realistic and less 
difficult than urban counselors.  Rural counselors in this study 
tended not to use external consulting services--probably because 
they are not available to them--and so may rely more on 
standardized assessments than urban counselors.
Study 3:  Employment Categories of Self-Employment Closures
One concern about the use of self-employment voiced by VR 
counselors is that consumers often have an unrealistic view of 
businesses that may succeed.  Counselors in our initial 
qualitative study suggested that many consumers interested in 
pursuing self-employment have unrealistic hopes of turning a 
hobby into a profitable business.  This study was conducted to 
examine the range of self-employment businesses pursued by VR 
consumers.
Method
As part of the telephone-based survey described above, counselors 
were asked to report the types of businesses VR had helped start.  
These reports were grouped into similar classifications and 
tallied.
Results
Table 6 lists the types of businesses that VR has helped to 
establish.  One hundred eighteen different businesses were 
reported.  Rural counselors tended to close more people to be 
mechanics (nine), farmers (six), small engine repairers (five), 
carpenters (four), and woodshop/woodworkers (four). 
Discussion
VR consumers appear to enter a wide variety of business ventures 
with the assistance of VR services.  Some, but not all, of the 
types of businesses people entered were specific to their local 
area (e.g., boat maker, marine engine repair, taxidermist, 
trapper)--something to keep in mind when looking for business 
opportunities.  Far from being unrealistic dreams, these 
businesses appear to be part of the mainstream economy.  
Anecdotally, one counselor reported that a consumer's business 
produced more income in fewer hours than counseling, tempting the 
counselor to follow the consumer into that type of business.
Conclusion
These studies suggest that self-employment should be more 
carefully considered as a vocational rehabilitation employment 
outcome and may be more applicable to rural counselors.  Rural 
counselors view self-employment more favorably and use it more 
often than their urban counterparts.  It may also be an adaptive 
response to rural economic conditions.
Results from these studies suggest that one important procedural 
development needed to promote the effective use of 
self-employment as a rehabilitation option --especially in rural 
areas--is to develop formalized assessment devices to help 
consumers and counselors with the self-employment process.  
Another approach may be to develop mechanisms to link rural 
counselors with outside resources that typically are not 
available to their consumers.  A third approach may involve 
profiling the current practices of rural counselors who believe 
they have unique approaches to the use of self-employment.
One obstacle faced in studying these rural vocational 
rehabilitation practices and outcomes involved the lack of 
centrally reported geographic data on the VR forms.  The addition 
of county of residence data would permit rigorous examination of 
these and other issues important to rural rehabilitation.
The long-running rural economic stagnation may also suggest that 
a review of the use of self-employment as a vocational 
rehabilitation employment outcome is in order.  By using 
self-employment as an option, VR counselors can contribute to the 
economic development efforts of the rural areas they serve by 
helping to create new businesses.  Similarly, VR administrators 
might consider allocating staff time to participating directly in 
rural economic development, thereby creating more opportunities 
for VR consumers by helping to improve the local economy of the 
areas they serve.  Such a linkage between rural VR and rural 
economic development agencies may represent the emergence of a 
true rural vocational rehabilitation model.
References
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Acknowledgments
This work was supported by a grant from the National Institute on 
Disability and Rehabilitation Research (#G0087C0228).  This study 
is part of a larger effort supported by NIDRR to develop 
effective strategies for providing rehabilitation services in 
rural areas.  The opinions expressed are those of the authors and 
do not reflect the position of the agency.  The authors wish to 
acknowledge the work of their colleagues Peg Plimpton and Cheryl 
Vandenberg on this project